This prompted a flat denial from the startup that it was closing down, but that only led to speculation that it was on the verge of being bought by Apple for "double-digit millions".

AllThingsD has now reported that what is "really happening" is that Color's engineering team, consisting of around 20 people and representing the majority of the company, is being "acqhired" by Apple.

According to multiple sources, the iPhone and iPad maker will reportedly pay between $2 million to $5 million for the team.

However, Apple is reportedly not buying Color's technology, intellectual property, domain names or liabilities. These will be left with Color, which is to be wound down, despite having around $25m still in the bank.

Apple and Color declined to comment on the report.

As The Verge notes, Color has "the unpleasant distinction of having raised $41 million before it even launched, by far one of the largest sums bestowed on any software company prior to them acquiring a single customer".

The company launched as a social discovery engine, but later changed to a Facebook-connected silent video app, and more recently agreed a deal with US telecoms giant Verizon to bake the live video app into Android phones.

The app, which allows users to share live video from their smartphone camera with others, has 460,000 monthly actives, according to AppData.

Sources claim that the Color engineering team will now most likely lend their expertise to cloud technology at Apple. This will certainly no longer be working on Android apps.

It is unclear where Color chief executive Bill Nguyen, who has come in for criticism for his handling of the startup, will go next after Color closes down. Its shareholders potentially stand to lose millions of dollars.